Indicators
TECHNICAL INDICATORS
- Created on Friday, 18 December 2009 10:01
- Written by Ivan Yurukov
Graphs show many things. However, sometimes the graphics are quite incomprehensible. In such situations, technical indicators are of great benefit to investors. They analyze the change in price and transfer it into a format that is much easier to understand.
Technical indicators are based on mathematical equations which calculate new values and place them on the chart. A typical example of it is the 'moving average'. In this case equations calculate the average price of a currency pair and book the values down on the chart in the form of a line.
When the price of the specified tool changes, the corresponding value of the indicator changes as well. As you can see as a whole this indicator smooths the movements and abrupts sharp changes because following the standard it is based on for a longer period of time. But still it follows the basic movement of the currency pair.
Read more: TECHNICAL INDICATORSMOVING AVERAGE – INDICATOR
- Created on Friday, 18 December 2009 09:42
- Written by Ivan Yurukov
This indicator is considered as the most fundamental of the trend indicators, especially because it shows on the one hand the direction of movement of the tool and on the other the potential levels of support or resistance. Moving average uses the average price of the currency pair at closing (but can also use the price at opening or closing) and books it down on the graph.
The result is a fairly tight line. You can influence on the values of the indicator as you reset the frame time which is used for average price at closing. In short periods moving average is sharper , while longer periods make it smooth. Read more: MOVING AVERAGE – INDICATOR
OSCILLATING INDICATORS
- Created on Friday, 18 December 2009 09:12
- Written by Ivan Yurukov
Oscillating indicators as their name implies, are indicators moving back and forth while the prices of currency pairs rise and fall. Oscillating indicators can help you determine how strong is the current trend of movement of the currency pair and also if this trend is in danger of losing the power of moving and reverse this movement.
When the Oscillating indicator moves too high, it is assumed that the currency pair is overbought (i.e too many people have made their purchases on the currency pair and there are not enough other buyers on the market to continue to move the price upwards) .This shows that the currency pair is exposed to the risk of lossing its power of movement up and turning the movement back. Read more: OSCILLATING INDICATORS
Bollinger bands - Indicator
- Created on Friday, 18 December 2009 09:31
- Written by Ivan Yurukov
Bollinger band trends is a trend indicator which shows two things - the direction and the volatility of currency pairs. The indicator consists of two bollinger bands, from the lower and the upper side of a moving average. Bollinger bands are based on standard on a 20-bar moving average.
Standard deviation is a statistical term that measures the deviation in the case of different prices at closing in relation to the average price at closing. The upper part is based on two standard deviations above the 20-period moving average, the lower one is based on two standard deviations below 20-period moving average. Read more: Bollinger bands - Indicator
COMMODITY CHANNEL INDEX (CCI) – INDICATOR
- Created on Friday, 18 December 2009 09:05
- Written by Ivan Yurukov
CCI is Oscillating indicator that can show you how bullish or bearish traders are to the market of a currency pair and estimated strength of these sentiments. By using CCI you can see the volatility of the currency pair, the same way as you see it by using bollinger bands.
How to construct CCI
CCI is based as on the average value of past price movements as well as on how much longer these price movements remained away from the average value . Thus traders receive indication of how volatile these price movements were . If the average price of a currency pair increases the CCI will also rise. Read more: COMMODITY CHANNEL INDEX (CCI) – INDICATOR